Organovo (ONVO) Shares Jump 17 percent

Shares of Organovo Holdings (ONVO) surged nearly 18% in late morning trading Wednesday after Cantor Fitzgerald initiated coverage on the stock with a ‘Buy’ rating and a $5 price target. The move comes on a strong volume too with the issue currently trading 5.6 million shares, well above the average of 1.66 million shares for a full session over the past 3 months.

“Applying a 4.0x market cap/revenue multiple to our estimated FY:21 revenues of $288.3M, discounted 20%, results in our price target of $5,” the firm wrote [via The Street] in a research note issued Tuesday. “Alternatively, applying a 20x multiple to our FY:21 EPS multiple of $0.81, discounted 20%, also results in a price target of $5.”

Organovo disclosed today that on April 17, 2015, it entered into a multi-year research collaboration agreement with Merck Sharp & Dohme Corp (MRK). The agreement will give Merck access to Organovo’s commercial exVive3D Human Liver Tissue service, and will also involve a collaboration to develop multiple custom tissue models utilizing the Company’s proprietary NovoGen Bioprinting Platform, for use in drug development.

ONVO shares recently gained $0.77 to $5.23. In the past 52 weeks, shares of San Diego, California-based development-stage company have traded between a low of $3.29 and a high of $9.25. Shares are down 32.17% year-over-year and 38.34% year-to-date.